As the vice president of a major corporation, he had been thrilled when he was transferred from St. Louis to the San Francisco Bay Area.
Yesterday, after nearly a year of cross country commuting, his St. Louis house still not sold, and his California mortgage still not solidified, he threw in the towel.
He will be taking a position in Kansas City, and abandoning the plan of moving to California.
This is the story of how difficult it is to move down in lifestyle for the sake of owning California real estate. It is a story that every California Realtor understands.
It is a story made all the more difficult as a result of the mortgage crisis, and the outdated concept of corporate relocations.
TIM'S STORY
He was somewhat immune to "sticker shock" because they had lived in California some 15 years ago. Still, he was thrilled to be coming home, and had requested the transfer. He claimed his company policy dictated that California relocations only come from within California.
Now he knows why.
In St. Louis, his $650,000 house had 6,000 square feet, a swimming pool, and an acre of manicured lawn. He decided on a similar neighborhood here (Danville, California) where a 2400 square foot 60 year old ho hum rancher is 1.2 million, minus one half acre, scratch the pool.
His equity would barely be enough to cover a 20% down payment, his wife would need to work, but hey, they were back in California, right?
Although his relocation benefits were generous, the package was out-dated and designed for a different kind of mortgage lending environment. But that was not the worst of it. I was stunned to realize the benefits (worth about $30,000) would only be paid out IF HE OBTAINED HIS MORTGAGE DIRECTLY THROUGH ONE OF 2 NAMED BANKS.
No mortgage brokers allowed. He was shocked, and refused to believe me.
I sent him away, with fine print highlighted in yellow. His office confirmed what I had discovered.
REJECTED
Neither of the 2 banks would qualify him, however, with his 6 figure income, his 785 score, and impressive job. Reason: 40% of his income would be coming from a once a year bonus, which would be paid out August 1, 2008. Within a month, he was back in my office.
He took it personally and it ate at him. Like so many others (who were protected by stated income loans and generous guidelines), he had never been turned down for a mortgage in his life.
In the past, these little roadblocks were always covered by stated income loans, I told him. Banks don't want jumbo money loans, I told him. Maybe your wife WILL be working, but they can't count the income now.. This isn't about YOU. It is about the state of the mortgage industry. (A little speech I have memorized by now).
UNSETTLED IN MORE WAYS THAN ONE
Eventually, he agreed to a lower priced home, and with my help negotiated a cash settlement for his benefits (in doing so, he lost about $10,000). On the other end, he continued to lower the price of his home that stubbornly would not sell.
He was becoming tired and worn down. The allure of a California lifestyle faded as the months passed, and things just would not jell on this end, or sell on the other end.
Two Realtors, one mortgage broker, a lonely wife, and one corporate American hero, wearily flying home every weekend to see the kids and hang out in the big beautiful house that no one would buy. Then back to California to look at the tired old houses that only 60% of his income would qualify him to buy. In between, the stress of a new job.
This was his life, for almost a year.
THE BOSS STEPS IN WITH A WILD CARD
In the end, his boss demanded that he rent a house in California and reunite his family. The company offered to continue to pay the mortgage on the St. Louis house. I reassured him that once the bonus was paid out, he could buy a better house, and that date was right around the corner.
The boss offered one other option. a wild card. An opening in Kansas City. It only took one weekend of soul searching (in the big house, while floating in the pool) to decide to abort the California dream. In Kansas City, he could get an even BETTER house than the one for sale, and be 3 hours away from his old location.
FOR RICHER, FOR POORER
There is a saying here in California. Be careful when you sell your real estate and move out of state. You WILL instantly become real estate rich, no doubt. But if you ever want to move back?
Getting back in is harder than you think.
Although losing a loan is never easy, I think Tim would agree, he is finally going home.
Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area
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